Indians are fastest in world at binge watching: Netflix CEO Reed Hastings

Reed Hastings, co-founder and CEO of video-streaming giant Netflix, sees India as an important market, although consumption is still mostly on mobile phones compared with other countriesJohn Sarkar | TNN | March 07, 2017, 07:32 IST

Like their curry, Indians love their TV shows spicy, with a sprinkle of violence and drama.

No wonder they have turned out to be the fastest binge watchers on Earth, lapping up Netflix series such as Narcos, Bloodline and Marvel's Jessica Jones in just three days flat.

The global average is four days. Reed Hastings, co-founder and CEO of video-streaming giant Netflix, sees India as an important market, although consumption is still mostly on mobile phones compared with other countries, where smart TVs are replacing traditional ones.

Hastings, a serial entrepreneur, co-founded California-headquartered Netflix, now valued at $60 billion, with Marc Randolph in 1997 after selling off his first company, Pure Software.

His advice to entrepreneurs: "Find an idea that most people think is stupid and it turns out to be smart. Because if everybody knows it's smart, the big companies will do it."

From renting out DVDs by snail mail to becoming one of Hollywood's most powerful players, Netflix co-founder & CEO, Reed Hastings has come a long way. And the 56-year-old entrepreneur is not showing any signs of slowing down.

After a bout of pedalling through by-lanes of old Delhi on a cool Monday morning, the man who has revolutionised how the world consumes entertainment, opened up to in an exclusive interview about his growth as an entrepreneur and his company's strategy for India. Edited excerpts:

For an Internet-based content company like Netflix, India could seem contradictory - fastest growing internet user, but mobile-driven. Huge appetite for content, but piracy dominates, internet spreading fast, but average speeds very slow. How does Netflix put its best foot forward in such a market?

We have been successful with Netflix in Mexico, Argentina and Peru and lots of places in the developing world, where we have seen people steadily investing in making the internet faster.

The same is happening in India, an example being Reliance's (Jio) tremendous investment. Nothing like that has ever happened in the world - $20-billion investment upfront, free 4G, 100 million subscribers in 60 days.

We have seen viewing of Netflix spike on Reliance's network. At the same time, we are announcing partnerships with Vodafone, Airtel and Videocon. And, we are optimising technology.

When we started, it took one and a half megabits to stream video on your mobile, and then we were able to bring it down to one megabit and a half a megabit. Now we can get it down to 200 kilobits, so you can get 25 hours of viewing with 1GB of data. We are further trying to bring it down to 100 kilobits.

Would you subsidise Internet access, either directly through tie-up with telecom companies or by lowering subscription prices?

The good news about data pricing is that it is continuing to fall across the world. Data cost can be an issue today, but in three to five years, it will be inconsequential.

Internet TV is just beginning. It will slowly replace linear TV in the way mobile phone replaced fixed-line phone. There are 300 million mobile phone users in India. But we are targeting mostly the high-end - 10 or 20 million - for whom our pricing is not a problem.

India's startup ecosystem today is roughly comparable to US's in early 1990s when you started your first company. What is the most important reason behind failure of talented startups?

You have to find an idea that most people think is stupid and it turns out to be smart. If everybody knows it's smart, big companies will do it first. For Netflix, it was mailing DVDs. Everybody said you are crazy. It's a short term business because they didn't understand how that could get you to streaming.

What would you say is more important for a video-streaming company - technology or content?

We will do better as a company if technology and content are both amazing. We are spending $1 billion this year on technology and $6 billion on content. We are spending on specialised servers that can speed up the internet. There is the personalisation AI too. Netflix learns your taste.

You have described Netflix as a binge-watching heaven. But don't you think that a user then would want all types on content on it rather than silos of Netflix content, HBO content and so on?

If you look at your mobile phone, you have different apps for different purposes. If you have one super app that did everything, you would like it because it wouldn't do all those individual things that well.

You will have five or six video services, just like you have three or four news sources or multiple gaming apps. But it's our job to be on the top 10 of your list.

The next 10 to 20 years is going to be the rise of Internet TV, we will do movies and TV shows, others will do sports, maybe 4K cricket, football and baseball. But each part of entertainment will get transformed by the Internet.

Much has been written about the Netflix culture, especially HR policies that include unlimited leave, no annual reviews, unlimited maternity and paternity leaves ...

All of that is because my first company was not that successful on a cultural basis. We had great products and the company grew, but it became a very difficult place to work with less fun.

When we started Netflix, it was really about keeping the fun alive as we grew. Our next cultural step is towards becoming more global. We are learning each market. We are working on starting our Mumbai office.

With Netflix entering India, do you think small writers, produces and directors, who have great content ideas will have better opportunity?

Well, it's not only about Netflix but it includes YouTube, Amazon, Hotstar ... with all of us bidding against each other to get great new talent.

So, the next couple of years will be flourishing for the Indian creative community - writers, directors and actors, as all these companies will invest to produce great content. At the same time, what we do is unique because we build a global audience for these shows. For instance, Sacred Games will be streamed all across the world.